It may be behind the times compared to other industries, but the healthcare sector is finally starting to consolidate space. Better technology, cost dynamics and other factors are allowing providers to do more with less.
“It’s easier to be more efficient with your use of space than it is to go build a building for $500 per foot, not counting the price of land,” said Mark Montana, principal, Cresa. “That’s the biggest driver; they want to make sure that their expense ratios and their debt ratios are in line.”
This consolidation has led to cost effectiveness within the health group organizations, making service delivery more streamlined and more patient focused. Shaving zeroes off the bottom line is by no means a new phenomenon, but the ability to better leverage technology is providing the means for that space reduction throughout the industry.
More and more providers are offering telemedicine options, for example, whereby a doctor can consult remotely with a patient. This reduces the need for extra exam rooms and a physician group can shrink their overall footprint without sacrificing capabilities.
“Healthcare is looking to break out and be more mainstream by developing best practices—not so much based on what their industry is suggesting but on what corporations are doing throughout various other industries,” Montana said.
Lessons learned from the logistics industry, for example, can inform how the supplies and equipment that a doctor or surgeon requests ends up at a medical facility with maximum efficiency. And it’s not limited to the supply chain; healthcare systems are also looking at alternate workplace solutions. If these organizations find ways to accommodate more remote working concepts, then as they grow the amount of square footage that they occupy won’t increase proportionately.
There is one segment of the healthcare real estate world that is expanding. The number of urgent care centers has increased by 44 percent in the past five years, according to a recent Cushman & Wakefield report, while the number of medical office buildings only grew by 5.2 percent. But this, too, is a phenomenon of healthcare providers looking to provide care as efficiently as possible.
HSA PrimeCare broke ground this summer on a 40,000-square-foot medical office pavilion on the Silver Cross Hospital campus in New Lenox, Illinois with a projected completion of January 2020. Eppstein Uhen Architects is the architect for the new project, while PREMIER Design + Build Group is serving as general contractor.
The facility will house the hospital’s urgent care, occupational health and primary care clinics, among other medical tenants. The main goal is to serve those patients with less acute conditions who might otherwise seek treatment in an emergency room setting. One of the main drivers for this trend for new urgent care facilities is to reduce the costs of delivering medical services.
“There are huge cost pressures on hospital systems these days and by using urgent care centers they can take some of the patient traffic that they would ordinarily see in their emergency rooms, which is a very high-cost place to treat people,” said Bob Titzer, executive vice president, HSA PrimeCare. “They can either divert it from the emergency room or they can pick them up before they even consider coming to an emergency room.”
Urgent care centers are being integrated into other ambulatory care centers often found off campus, out in the community. A multi-specialty building that offers services such as scheduled doctor visits, imaging, specialist follow-up or urgent care can consolidate multiple medical offerings in a location that is convenient for the patient and cost-effective for the provider.
“As part of consolidating facilities, hospital systems are adding those urgent care centers in with their bigger facilities that are out in the community so that they can keep more services in one spot, consolidate their operations and make them more efficient,” Titzer said.
One way that the healthcare sector is finally catching up to other industries is in consolidation of support services, such as call centers. Whereas a patient may have interacted with multiple employees before and after scheduling a procedure, better technology has allowed the industry to reduce those points of contact. As a result, hospital systems are now able to manage their non-medical space in a more efficient manner.
“We’ve completed several consulting assignments for a major institution that wants to use the enterprise space on their campus to provide more access to revenue producing opportunities,” said Montana, “meaning not the back office staff that supports the enterprise as a whole.”
For this particular project, the healthcare institution had administrative staff scattered throughout 10 buildings on campus. Just by consolidating those functions, their footprint should contract from between 250 to 300 square feet per person to approximately 100 to 175 square feet per person.
“Providers want space that is close to the hospital for doctors and revenue producing opportunities,” Montana said. “They are looking at ways of consolidate a very important element—the admin group that supports the enterprise—to not only be more efficient but be more efficient as they continue to grow.”
